Very, very profitable.
The cost of an extended warranty is extremely rewarding to the retailer and of little value to the consumer. If product failure is an issue that warrants the purchase of an extended warranty then the product shouldn't be purchased. I purchased an extended warranty once and that will be the last. It was not an extended warranty by the manufacturer of the product but some 'fly by night' outfit that probably was out of business before the warranty expired. All repairs or replacements had to be channeled through them. If you need it tomorrow it's not going to be there and when its my equipment a month from next Thursday is not acceptable. Did I mention that by the time the equipment might need the warranty it will be of greater value to purchase new with the latest technology? The money saved on the warranty will make a sizeable down payment on the new hardware.